Author: Kendra Maddock

Kendra Maddock is an Executive Project Manager at Growth Management Group and brings over 13 years of experience in Small Business Management to the team.

Thousands of Job Openings Amid Crisis

More than 2,000 Michigan companies are seeking to fill crucial, immediate positions in logistics, healthcare, manufacturing, and agribusiness industries. It may seem that amongst the Coronavirus crisis, this wouldn’t be the case, but the State of Michigan isn’t the exception. We are seeing this happening across the country.

During this crisis, consumer demand in specific industries is swelling. Chief amongst these are online retailers, supermarkets and online grocers, restaurant delivery firms, and health and health care companies. These companies are racing to fill staff as demand for their services soars.

Amazon, CVS, Dollar General, Domino’s Pizza, Instacart, Kroger, Lowe’s, Papa John’s, Pepsi, Publix, Walgreens, and Walmart are the national companies leading this hiring surge.

Company Estimated Hires
Aldi 9,000
Amazon 100,000
CVS 50,000
Dollar General 50,000
Domino’s Pizza 10,000
Instacart 300,000
Kroger 20,000
Lowe’s 30,000
Papa John’s 20,000
Pepsi 6,000
Publix 20,000
Walgreens 9,500
Walmart 150,000

 
In addition to on-site workers, the demand for remote workers has risen dramatically. The research firm Thinkum shared information that global job postings by video chat platform Zoom nearly doubled from January 1st to March 9th. At Slack, a company that makes and supports online messaging software, job postings jumped 50% over the same period.

Does the fact that these companies are hiring mean that the Coronavirus crisis has not impacted them? No. It means there is a demand, and companies across the country small to large are seeking ways to support their communities. “We’re spending less time thinking about the revenue and less time thinking of anything other than can we give our associates the support that they need, can we be a good corporate citizen,” said Lowe’s CEO Marvin Ellison.

We are doing the same thing. What can we do to support our struggling employers, communities, and have an impact on the economy? We can share a tax credit that will have an immediate effect on all companies hiring from one employee to thousands.

The Workers Opportunity Tax Credit (WOTC) is a Federal credit for employers hiring individuals who qualify from specific target groups. This credit has a long history going back to the 1940’s and has been extended through the end of 2020. In 2019 the Work Opportunity Tax Credit and Jobs Act was introduced to the House to make the credit permanent.

Employers can receive from $2,400 up to $9,600 for a qualifying employee. About $1 billion in tax credits are claimed each year under the WOTC program, according to the Department of Labor. We have a full expectation of our current crisis that this dollar amount will increase.
GMG has created proprietary software that allows employers to quickly screen for and claim the WOTC.

Please visit our website for more information GMGSavings.com/Services/WOTC.

Cost Segregation for Automotive Dealerships after the TCJA Changes

The automotive dealership industry is unique because each dealership is in a constant state of construction, remodeling, expanding or purchasing existing properties. The only way to ensure this constant state of flux doesn’t bankrupt a dealership is to review these assets to determine the shortest recovery life possible, expensing in the current tax year.

By taking advantage of all eligible tax deductions it opens up cash flow for your dealership that would have otherwise been lost. A fixed asset review can easily be done by having a cost segregation study performed.

The Tax Cut and Jobs Act or TCJA was the most sweeping tax code change in 30 years and has significant impact on the automotive dealership industry along with the tax incentives that allow you to obtain the benefit from a cost segregation study.

There are three significant aspects of the TCJA that when combined make for an interesting ride for auto dealerships looking to obtain their rightful tax deductions. Let’s take a look.

Section 179
The TCJA expanded section 179 from a $510,000 limit to $1 million and now includes improvements it did not previously such as: roofing, fire protection and alarm systems. All of which are large expenses for an auto dealership in the midst of new construction or remodeling.

Floor Plan Interest

The TCJA preserved the 100% deduction of floor plan interest. If you are eligible for floor plan interest you must claim it, it is not optional. However, there is a catch. If you are eligible you cannot claim bonus depreciation. This doesn’t mean an automatic sigh and slump in your chair, not all dealerships qualify for floor plan interest and bonus depreciation is not the only aspect of a cost segregation that benefits auto dealerships.

Bonus Depreciation
Bonus Depreciation was highly expanded with the TCJA. It was increased from 50% to 100% and applies to both new and used properties acquired through December 31, 2022. This is an unheard of expansion of bonus depreciation and has such a significant impact that the National Automobile Dealers Association (NADA) is currently working through hearings with the IRS demanding the 100% bonus depreciation because the TCJA eliminated the like-kind exchange tax benefit for all but real property. We expect to see continued discussion on this topic over the next several months.

Although some automotive dealerships won’t be able to benefit from the expansion of bonus depreciation because of the changes with the TCJA it does not eliminate the enormous financial impact that a cost segregation study has for an auto dealership.

To find out more please contact speak to your Advisor today!

The Permanence of the R&D Tax Credit, a Reality?

The R&D Tax Credit has been in existence for the past 33 years, having been extended by Congress 15 times since it was created in 1981. On Wednesday, May 20th the U.S. House of Representatives passed a bill known as the “American Research and Competitiveness Act of 2015” or H.R. 880, to make the federal research and development tax credit permanent. The bill passed with a 274-145 vote, indicating that the bill has support from both parties however it still needs to make it through the Senate and many hurdles await the bill there. Republicans hold the majority in the Senate so the bill seems favorable to pass but President Obama has threatened to veto.

The threat of veto is based on the belief by the White House that the credits estimated 10 year cost of $180 million in lost tax revenue should be offset elsewhere. It is hard to anticipate how President Obama will act as he has expressed both positive and negative remarks in regard to the bill. Whether President Obama chooses to veto the bill or not, Congress could override the veto by a two-thirds supermajority vote of both the House and Senate however, a supermajority vote is not easily obtained.

Looking past the technicalities of governmental red tape, there is cause to be optimistic because this is now the second year in a row that a stand alone proposal to make the R&D credit permanent has been not only been seriously considered but successfully voted upon in at least one of the two houses. Additionally, the bill is receiving support from both parties which is a necessity for it to succeed. These steps of forward momentum lead us to believe that even if it is not this year, the the outlook of the R&D Tax Credit becoming a permanent part of the U.S. tax code is very favorable.

Making the R&D Tax Credit permanent would boost the confidence of American businesses to invest in the development of new technologies leading to the creation of quality jobs. The bill would also make the credit easier for small businesses to obtain by allowing them to use it to offset tax liability, including the alternative minimum tax. Many believe as Texas Rep. Kevin Brady the writer of this bill does that this bill needs to be passed and become law so that the United States can remain competitive in innovation and within the world wide economic marketplace.

Strategic Partnerships for Mutual Benefit

A strategic partnership is when two businesses join together for mutual benefit. The businesses would normally not be competitors but instead work cooperatively with a common goal in mind.

Strategic Partnerships allow businesses to gain a competitive advantage by mutually sharing of resources, markets, technologies, capital or people.

At Growth Management Group (GMG) we believe wholeheartedly in building Strategic Partnerships and actively reach out to industries and organizations that would benefit from such a partnership. In 2013 GMG entered into a strategic partnership with ELFA (Econo Lodges Franchisee Association).

ELFA’s goal is to “help each franchisee maximize the value of their property through networking and the sharing of creative ideas as well as time and money savings tips”. This strategic partnership supports ELFA’s goal by providing its members the opportunity to gain millions of dollars through specialized tax incentives.

At $240,000 the hotel and hospitality industry is currently number two for the largest average savings received per client with GMG. This is because nearly all business owners in the hotel industry own their building, and usually own multiple locations. With that basic qualification hotel owners substantially qualify for :

GMG offers ELFA members additional benefits including:

  • Free Consultation
  • 30% Discount on Study Fees

GMG believes in building and sustaining strategic partnerships to ensure the continued benefit for all involved. Hasu Patel, President of ELFA said, “The Econo Lodges that have worked with GMG so far are please with the results in savings. I encourage more Econo Lodges to reach out to Growth Management Group”.

If you would like to know more about the GMG’s ELFA partnership or Strategic Partnerships please call 888-705-5557.

Hotel Rebranding & Cost Segregation

The Hotel Industry is unique in that like a commercial product a hotel follows a definite life cycle. If a hotel owner does not keep this in mind, their facility can quickly become worn out and dated in comparison to their competition. To stay competitive, Owners must acknowledge that there will be constant new brand competition. A newer, swankier hotel that offers the latest amenities to its guests will quickly put an outdated hotel out of business. This fact leaves few options of staying competitive for a hotel owner. The most prominent option would be to rebrand. What does “rebranding” entail?

Rebranding can be a broad term ranging from a simple revamping of a logo but more often is a much larger undertaking with the ultimate goal of retaining guest loyalty and awareness. Rebranding is especially important today because of major social, environmental and technological changes that have taken place over the past five years. For example, five years ago wifi throughout a hotel was rare, flat screen televisions were a novelty, the expectation of a hot breakfast almost unheard of, and eco friendly was a word most people were unfamiliar with. All of those ideals have changed, and are now an expectation for most travelers. This new expectation has forced hotel brands to insist their franchises undertake multi million dollar rebranding to live up to their flag.

What does this mean for Hotel Owners?

There is a little known opportunity for Hotel Owners that would directly affect the rebranding of their organization. The opportunity is Specialized Tax Incentives, specifically:

Specialized tax credits are an essential fiduciary component when building, purchasing or renovating a hotel or motel.  These credits affect rebranding and the constant renovation of non-structural components of their building such as:

  • Carpeting / Flooring
  • Decorative Lighting
  • Cabinetry
  • Dedicated Electrical & Plumbing Systems
  • Power Generators
  • Security Systems
  • Wifi / Internet Cabling
  • Parking Lots
  • Curbs
  • Sidewalks
  • Landscaping
  • Fountains
  • And many more…

A Cost Segregation Study is an engineering based tax analysis in which these types of components are broken out and allocated to a shorter life class, depreciating them at an accelerated rate.  This means a building purchased, constructed or renovated since January 1, 1987 and costing in excess of $500,000 should have all improvements and renovations qualifying based on their individual completion dates.  So, every hotel having performed renovations through rebranding within that time frame have a potential benefit sitting on the take just waiting to be captured!

To determine if your facility could capture a benefit, simply contact Growth Management Group and ask for a basic calculation, performed at no charge.